Berkeley Berry future in the balance

THE future of one of Britain's largest financial advisers, Berkeley Berry Birch, is in doubt today after the City watchdog found it guilty of three years of sales mismanagement and said it was investigating whether the firm had properly ring-fenced customers' money.

The company today estimated its past actions could leave it with a bill to compensate consumers of between £500,000 and £1m. The Financial Services Authority wanted to fine its main division, Berkeley Independent Advisers, £425,000 for three years of failure to heed 'numerous warnings' about its sales strategy, both from internal compliance and independent experts.

But the firm is so cash-strapped, the FSA has settled for giving it a public censure. The FSA reckons 3,800 customers face the 'risk of financial loss'.

Berkeley, 30% owned by Cliff Lockyer, one of the founders, who today stepped down as chief executive, had told the FSA it was short of money needed to operate as a regulated financial adviser.

Today it said it had 'combined capital resource shortfall of £10.9m'. It is now taking legal action against the FSA over the timing of the proceedings.